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Sun Pharmaceutical warns of 2018 sales drop amid drug pricing pressure

Sun Pharmaceutical Industries Ltd.'s top executive warned investors that sales could drop in 2018 due to pricing pressure on generic drugs in the U.S. and regulatory issues at its India-based Halol plant.

Dilip Shanghvi, the company's founder and managing director, said on a May 26 earnings call that the company expects fiscal-year 2018 to be "challenging" because the U.S. generics industry is facing "rapidly changing market dynamics." He added that "increased competitive intensity and customer consolidation is leading to pressure on pricing."

Shanghvi pointed to a "new normal" being established, and said Sun Pharma may see a single-digit decline in consolidated revenue for fiscal 2018 over fiscal 2017.

The Indian drugmaker reported a net profit of 12.23 billion Indian rupees for the fourth fiscal quarter of 2017, down 14% compared with the year-ago quarter. Sales totaled 68.25 billion rupees, representing a decrease of 8% over the same quarter last year.

The executive also acknowledged that growth has been "partly constrained" by the delays of approvals because of the problems at its facility in Halol, which received a warning from the U.S. Food and Drug Administration in 2015 for violating manufacturing standards. Shanghvi said that the remedial steps to address the issues are ongoing, and the company is periodically updating the agency.

Drugmaker Lupin Ltd. recently voiced similar concerns after reporting its earnings for the final quarter of fiscal 2017. CEO Vinita Gupta said flat or declining sales in the U.S. could continue for the next 12 months, Bloomberg News reported, citing a telephone interview.